“Wage hike in Zimbabwe will not translate into an increase in purchasing power”

Ngqabutho Mabhena, general secretary of Zimbabwe Communist Party, says the government is seeking to resolve the economic crisis by reducing the workers’ real wages as well as the budgetary allocation, and using the costs thus extracted to service foreign debts

March 27, 2019 by Peoples Dispatch
Massive protests broke out in Zimbabwe in January after fuel prices were hiked by 150%.

After months of strike action and demonstrations by the unionized public sector workers, the government of Zimbabwe reached an agreement with the Apex Council last week. The workers have been reeling under the pressure of stagnant wages and rising prices. However, questions have been raised on whether the hike is actually effective considering the massive price rise in recent times.

As per the agreement reached with the umbrella body, representing 16 different labor unions in public sector, “A cost of living adjustment of USD 400 million (will) be effected across the board for all members of the public service with effect from April 1.”

This would translate into a 29% wage hike for all public sector workers, following which the salary of the lowest paid among them will increase from USD 441 to USD 570.

However, this hike will not translate into an actual increase in the purchasing power of the workers because there is no increase in the budgetary allocation to fund the pay rise. In fact, the government has stated that the annual budget for this year, which has already seen an austerity crisis, will be further slashed by half.

“The government is broke. It has run up high debts and is no position to pay the salaries to workers,” general secretary of the Zimbabwe Communist Party, Ngqabutho Mabhena, told Peoples Dispatch. The government is extracting the funds required to finance the salary hike from the workers themselves, by imposing higher taxes on fuel. In fact, the funds thus extracted far exceed the hike offered, he explained.

The cost of fuel was raised by 150% in mid-January, triggering massive protests which were brutally repressed with armed forces. As a result of this fuel price hike, the prices of bread and other essential commodities have also been increasing sharply.

A 29% wage hike under such circumstances is nowhere close to what will be required to offset the costs imposed on workers due to this price rise, and will not result in an increase of their purchasing power.

The government is seeking to resolve the economic crisis by reducing the workers’ real wages as well as the budgetary allocation, and using the costs thus extracted to service foreign debts. These debts, including that from the International Monetary Fund, have not contributed to improve the lot of the working class, who are now being squeezed to finance the repayment, Mabhena said.

Under such circumstances, in order to bring about a real increase in the earnings of workers, Mabhena said, “We have already called on the government to engage in a National Economic Dialogue” to map out the way forward to revive Zimbabwe’s economy. “But they are not interested. The government is [blindly] chasing foreign investment, which is not going to help our workers.”

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